Shaggy and Scooby are frightened by the costumes, despite the fact that they are not alive. Velma reveals to Daphne and Fred that she has fallen in love with the museum's curator, Patrick Wisely. Unfortunately, both of them are too afraid and worked up in their jobs to become a couple and both walked away.

But this momentous occasion turns sour when a storm causes a power cut in the museum and then a bolt of lightning shatters a window. In this distraction, Daphne notices a strange green mist floating about one of the glass cabinets. Daphne removes a curtain covering the cabinet and finds herself face to face with a terrifying and alive Pterodactyl Ghost. The prehistoric predator somehow became real and breaks free of its cage. The gang, believing it is simply a criminal in the costume, attempt to capture the pterodactyl in some curtains, but Shaggy and Scooby mess it up and are sent on a wild ride when their wrists get caught in the rope binding the pterodactyl and fly around the museum causing mayhem.

Then a mysterious masked villain calling himself the Evil Masked Figure appears and announces this is just the beginning of Mystery, Inc.'s demise. And with that, the Pterodactyl Ghost snatches up two monster costumes from the display, dumps Shaggy and Scooby and then takes off into the sky with the Evil Masked Figure in tow. After the robbery, Velma discovers a secret passage the pterodactyl came out of and also a real reptilian scale.

The following morning, Heather reports on the robbery and harshly criticizes the gang's tactics in the robbery and even takes context from early video footage to make it sounds like Fred dislikes Coolsville. Shaggy and Scooby decide they will from now on act like real detectives and join the other three in the laboratory. Velma gets data from her reptile scale and it says it is real! The gang proposes that it is one of the foes they unmasked. Daphne believes Jonathan Jacobo, the original Pterodactyl Ghost is the culprit, but Velma reveals he died after a prison escape. The gang then decide that Jeremiah Wickles, the Black Knight Ghost, is behind the mystery and set out to his mansion.

Upon arriving at the mansion, the gang fall into a trap set up by Wickles, but Daphne frees the gang with her makeup kit and also a pair of salesmen and a buttercup scout who fell into the trap. The gang split up to search for clues. Scooby easily finds clues, but is oblivious to them and picks up sunglasses and underwear. Shaggy finds a stereo-phone and breaks it. Fred, Velma and Daphne find shiny green footprints that lead to the library. Velma states that Wickles is mad about the supernatural. They find a book that instructs how to create carbon-based predators or in other words: how to create monsters.

Shaggy and Scooby are reunited, Scooby carrying a pile of random items and dumping them. Scoob starts singing into a toilet brush and Shaggy discovers a sticky note on his paw. It reads that Wickles is visiting the Faux Ghost, a club in the dark corners of the city. They discover they have just discovered a clue and start dancing in their discovery. But a sudden evil chortle causes them to jump in shock. Scooby lands in the arms of their arch enemy, The Black Knight. Instinctively, Shaggy and Scooby leg it and try to keep the Black Knight from entering the room by piling furniture in front of the door, but the knight appears through a secret passage.

Fred and the others appear and the Black Knight knocks out Fred. Daphne picks up an axe and battles the Black Knight, vandalizing Wickles' house in the process, all the while Velma scans the book for his weakness. The Black Knight beats Daphne but Velma finds his weak spot and kick him in the "round tables" as the Black Knight cries.

The gang return to their headquarters and Shaggy and Scooby sneak out to the Faux Ghost to question Wickles. Velma announces that the glow of the footprints at the mansion and the reptile scale are both made of a substance called randomonium. Patrick appears and Daphne turns Velma into a "glamorous, mysterious, adventurous jet-setter hot babe" in an attempt to try and make Patrick like Velma. The four get into the Mystery Machine and head off to solve the mystery. About this time the Pterodactyl Ghost and Black Knight steal the rest of the costumes from the museum and the Skeleton Men and Cotton Candy Glob are made into real monsters.

Shaggy and Scooby arrive at the Faux Ghost and find that the place is haunted by all of the criminals that had dressed up as monsters. They disguise themselves and find Wickles, but discover he has nothing to do with the monsters. They are then found out and chucked out of the club.

The others discover that the Coolsonian has been robbed again by the monsters and they have hijacked all of the other costumes. Patrick disappears and the gang are booed by their fans.

Shaggy and Scooby bump into Patrick and he tells them the news and they quickly dash off to follow Wickles to the Old Tyme Mining Town nearby. The two lose track of Wickles and explore the silver plant nearby, but run into one of the Skeleton Men. The two flee from him and activate an elevator which they clamber into. The other arrive at the mine and discover Wickles planning to make the mine a theme park.

Shaggy and Scooby find a laboratory and find a fridge full of potions. They morph into several things including a woman, Taz from the Looney Tunes, a muscle-bound dimwit and an intelligent scientist dog. They cause an explosion and are found by the rest of the gang. The five then find a hidden room that has a giant machine in it. Velma figures that Patrick is the culprit. Fred, Daphne and Velma go to explore the rest of the caves nearby, leaving Shaggy and Scooby with the machine. The two find a control panel and activate the machine, bringing more monsters to life.

Shaggy and Scooby turn around and find themselves surrounded by the Zombie, Captain Cutler's Ghost, Miner 49er and the formidable Tar Monster. The other three return and help Shaggy and Scooby escape, Fred snatching the control panel and dodging his way in a Matrix-style through the attacks of the monsters. Mystery, Inc., flee to the elevator and a surge of electricity flies overhead and the 10,000 Volt Ghost appears. The gang get separated and flee from the 10,000 Volt Ghost and the Skeleton Men. The Evil Masked Figure confronts his new minions and tells them to hunt down the gang and get the control panel back.

Mystery, Inc., flee out of Coolsville as the monsters invade it. They retreat to their old high school clubhouse in the swamps. The gang discover that they can reverse the randomonium effect and destroy the monsters. Shaggy and Scooby wait outside and criticize their role in the gang. Captain Cutler suddenly appears and the gang try to escape in the Mystery Machine but are paused by Cutler when he fires some chains from his spear gun. Fred reverses the Mystery Machine into Captain Cutler causing him to go flying into the lake. Mystery, Inc., are chased across the city by the Pterodactyl Ghost and the Zombie nearby runs them over while driving an oil tanker truck. The gang lose the pterodactyl when it collides with a billboard.

The gang arrive at the mine and are confronted by the Black Knight who rides an armored horse. Fred finds a motorbike and uses a pipe as a lance and jousts against the Black Knight. The gang runs into the 10,000 Volt Ghost who traps Daphne from the others. Daphne tries to fight the electrical ghoul but is electrocuted and sent flying into the air and crashes down now with burnt hair and starts coughing. Fred is defeated by the Black Knight and the two villains surround Fred and a burnt Daphne. Fred admits to Daphne he was scared and afraid to show his sensitive side the whole time.

The other three nearly run into the Skeleton Men and Shaggy and Scooby spill the beans to Velma that they are not heroes, but she makes them change their minds when she tells them they are like idols to her and she wishes she could be more like them. Shaggy and Scooby bump into Miner 49er and run from him after he tries to fry them with his fiery breath and he literally rips down a fence in order to chase them. Velma distracts the skeletons and one tries to hit Velma by lobbing the other skeleton's head at her, but it misses and the skull ends up stuck in a door. Fred and Daphne are trapped by the Black Knight and 10,000 Volt Ghost. Daphne spies some jumper cables in the Mystery Machine. Fred connects the cables to the Black Knight and Daphne hurls a metal rod with attached jumper cables into the 10,000 Volt Ghost's body knowing she'll get electrocuted again. The two flee as the 10,000 Volt Ghost's body is sucked into the Black Knight, causing an explosion. The 10,000 Volt Ghost is destroyed and the Black Knight's charred helmet rolls away, his last words were "Oh, crap!"

Velma escapes the Skeleton Men by flying down a hole. Shaggy and Scooby lure Miner 49er into a trap. Scooby farts at the same time the miner breathes fire and fries Miner 49er. Velma finds herself in a cave that has a shrine to Jacobo and the Pterodactyl Ghost. The shrine belongs to Patrick and Velma flees from him. Velma nearly falls to her death, but Patrick saves her and Patrick is captured by the Pterodactyl Ghost. Shaggy and Scooby run into the giant, but edible form that is the Cotton Candy Glob and eat him alive, with him screaming that he'll give them serious cavities.

The gang are reunited and run into the Monster Hive, but are confronted by the Zombie, Miner Forty-Niner and a fused form of the Skeleton Men. Fred attempts to race to the monster machine, but the Tar Monster appears and grabs and smothers him in tar. He then grabs Daphne, smothers Velma who is lying on the floor, and grabs Shaggy with tar tentacles afterward. Scooby is cornered but finds a fire extinguisher which amazingly freezes the Tar Monster's body. Scooby flies about freezing the Tar Monster and then smashes through his body. He then falls into chunks of ice with his eye landing on the body-shaped ice with an ice block sealing back up the body. Scooby leaps over the Skeleton Men, pulls down the Zombie's trousers to reveal underwear and he uses Miner 49er's pickaxe like a springboard and flies into the air. The Pterodactyl Ghost swoops in to try and snag the control panel Shaggy tosses to Scooby. Scooby grabs the control panel and the Pterodactyl Ghost flies straight into the Tar Monster's belly and drowns.

Scooby activates the machine and the monsters all die out, the Pterodactyl Ghost presumably crushed or drowned by the Tar Monster's body, as he is a romote control monster and is defeated, but a costume remains. Miner Forty-niner and the Zombie fall to dust (although the Miner 49er and Zombie's clothes were the ones that didn't fall to dust, except for their skin) and the Skeleton Men transform back to costumes soon after. The Tar Monster releases the gang from his grasp and then drowns in his own body, his single eye exploding (although his body turned into a costume and the eye fell back on the costume). The Evil Masked Figure tries to flee, but collapses on the catwalk and surrenders.

Outside, the press and the citizens of Coolsville flock into the mine like sheep. Mystery, Inc., unmask the villain and reveal it to be Heather Jasper Howe, and her cameraman is arrested for helping her in her plot. But then Heather's face is ripped off to reveal Dr. Jonathan Jacobo. Everyone is quite taken back by this, especially Wickles (and a female police officer who literally leaps back in surprise). Jacobo survived his fall off the prison wall and into the ocean, and plotted against Mystery, Inc., by creating the Howe persona to turn the press against them and then framing Wickles by putting the book and the Black Knight in his mansion. Jacobo and Ned are arrested and taken away.

Velma and Patrick become an item, Fred and Daphne embrace each other in a kiss and Shaggy finds Captain Cutler's lifeless helmet and Scooby mistakes him for a monster and clobbers him with a sound speaker. The two hug. Afterwards, Mystery Inc., Patrick, Wickles and Coolsville dance to "Shining Star", sung by Ruben Studdard.

Locations

Costumes seen in the film

Notes/trivia

Redbeard's Ghost and the Creeper were to be other monsters to appear in the movie (as concept drawings are shown in the special features), but were probably scrapped because they are a lot like Miner 49er and the Zombie. Although Redbeard did not appear as a monster, his costume, ghost ship and portrayer, C.L. Magnus appeared.

The video version is re-edited slightly; the film caused controversy upon release when concern parents found its comical drug references to be a little too out-in-the-open and explicit for a film intended for children. The VHS and DVD releases excise some of this objectionable humor, and the theatrical version has never been re-released.

On of the DVD's special features has a game which shows a new monster in the Museum: The Mermaid. It also shows that the Mermaid's Ghost has a cartoon version in the title about this gilled goon.

Creeper: The Creeper is a zombie that was replaced by the Zombie in the film. He can walk through walls. His concept drawing can be seen in the DVD special features and his costume is seen in the museum.

Ghost Clown: The Ghost Clown ran amok in a circus in the original series, hypnotizing the gang to do his evil deeds. He appeared as a costume in the film. On the Internet Movie Database profile for the film, it claims that the Ghost Clown was listed in the uncredited cast, but he never appeared in the film.

Phantom Shadow: The Phantom Shadow was going to appear in the movie but was scrapped as well. It does seem to appear in the bonus sections of the Scooby-Doo 2 DVD and blu-ray section. Its concept was to hover through walls and it seemed to resemble its cartoon design due to its jail chain on its right arm.